The Ramsey Show - App - Don't Keep Student Loans Around Like a Pet! (Hour 1)

Episode Date: September 2, 2021

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Music Music Music Music Music Music Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Dr. John Deloney, Ramsey personality, best-selling author of

the book, Redefining Anxiety, is my co-host today, and we're going to answer your questions about your life and your money. If you've not heard the Dr. John Deloney show yet on podcast, it is our fastest-growing podcast at the moment, and you should chime in. He talks all about mental health and boundaries and your crazy relatives and your crazy self and whatever's going on out there that we need to deal with with relationships and so forth and it is a an informative fun and sometimes really poignant show so be sure and tune into the doctor sometimes rarely no it is it is i was

listening to it this morning i listened to the listened to the podcast that dropped this week. It's very good. It's very good. And it's even going back and reviewing some of your first shows because it's the anniversary edition that just dropped. Your first year. We've been doing this for a year. You've been doing it for a year.

That's a weird twist of fate, man. What a weird world. Good grief. Wherever you happen to be, ladies and and gentlemen it could all be very different a year from now yeah well and um yeah or 30 years or yeah you never know so in your case 111 but it's good it could always be different it could always be different yeah well we can we can help you with that if you want to shorten it 111 i don't know. I don't think you're that old. Open phones at 888-825-5225. Get him out of this before he gets in trouble.

Brian's in Quincy, Illinois. Hey, Brian, what's up? Hey, how are you doing today, guys? Better than I deserve. How can we help? Well, my wife and I live in a small town. It's about 1,000 people, and we're having a hard time finding a house to kind of grow, you know, a bigger house for us. So we're

thinking about adding on. Currently, our house does not have a garage. So part of the addition would be a two-stall garage and then adding a mudroom with laundry room and half bath and then extending our living room as part of it. We don't know if that's a wise decision. However, housing, there's no houses for sale in our small town. But if they are, they're either way too small or way out of our budget. Just looking for a little advice. Okay. Well, there's nothing to compare it to, obviously.

You don't have a lot of options if you're going to stay in that little town. How close are you to another town that you could just move over one one well we we really like the school system that's the problem we we it's a small town community the town i work in is 20 minutes away and it's about five times as big as a school system we just love the small town community where we're at that makes sense yeah it makes sense uh but not if you're going to spend $200,000 that you're going to lose. No, no. The addition is around $50,000 to $55,000. Do you have the cash?

No. We would have to basically, we're kind of looking at it as if we bought a house, we would do a construction loan and then roll that into a permanent mortgage. Yeah. But everything would be- And what's your household income? Our household income is just about $72,000. Okay.

And what's your current first mortgage amount? $70,000. Okay. Well, I mean, you've got $120,000 in this house when you're done, and it's a difficult market to sell a house in. So that's what you're signing up for. You're signing up for a long-term play. Okay.

And probably not a lot of escape hatches for this so uh be careful about rationalizing it or justifying it or whatever and moving on past common sense so i mean what you've described is not completely out of control um it just sounds very um i i i mean just tell you anytime in my life this was here's what's bothering me, okay? You can go ahead and do it, Brian, if you want to do it. That's fine. Okay, but here's what's bothering me, and I want to put the principle out there for you, for me, for everybody else. Any time I start saying to myself, there's only one way to solve this problem that makes any sense at all,

that means I have not thought about this enough and I'm getting ready to make a stupid butt error. And that's the way you've described this whole situation. And that's what's bothering me about it. Because you've clipped the edges off of this thing six different ways to where there's no way to come to any possible other conclusion other than the one you have come to. And I always like to have a whole

bunch of options uh or just back up and throw a grenade in the middle of it and just to make me rethink what if because every time i i i clip the edges off of it i say well the school system and well the other houses in the town and oh then you came to this and then there's this and then there's that and you know we gotta have something bigger and you just keep you know you keep working your way down to where there's only one possible way to solve this issue because of the limitations you put on the decision you set yourself up with a decision making framework for making a mistake that's right and i i don't like this for a couple different reasons dave i don't like it because he's adding garage.

He's going to add square footage to this home, but it's not going to be stuff that's generally counted, right? It's going to be a half bath and then a garage space and some storage space. It'll be nice features, but it's not like he's adding a bedroom or a master bathroom, things that are easily ROI'd, right? Well, you say, yeah, a living room built in there.

But you've got that. And then I always want to push back on this. This is the only school. Yeah. It's smaller. It's this. And usually that comes from a lot of Internet research or that's the way I did it or some mythology. Me and my wife had to deal with the fact that our kids' school experience is different than ours.

And I keep leaning back towards there's the right way to do it, which happens to be the way I experienced it, and then have to breathe and exhale and realize there's a whole bunch of different ways to do school. And I'd much rather see him look closer to work and think about the life he could get back, $50,000. What could that buy him in that community that he could sell again? I love the way you framed it. We just usually reverse engineer.

You know what I really want is a cool garage. We need a bigger living room. And I'm going to make these facts fit this narrative. And then I'm going to have to go borrow money and do something silly. Yeah. I don't like it. I don't like how you came to the conclusion, but the conclusion is not completely off the table. So, again, if you want to go ahead and do it, I'm not going to yell at you and call you stupid or something like that.

That's not what I'm saying. I'm just saying that any time somebody calls me up and goes, there's only one way, that always bothers me. Because every time I do that, I screw it up. I would love, I think it would be worth a trip for you and your wife to go down and meet with the principal of a local school, buy where you work, and just feel what that would be like. Maybe you've already done that, but I think that would be worth doing it. Oh, interesting idea. All right. Coming up next is Jonathan in Salt Lake City, Utah.

Hey, Jonathan, how are you? Great, Dave. Appreciate the influence you've had on me and my adult children. It's made a huge difference. I'm honored. Listen, my wife and I have been debt-free since 1994. We have six rental properties, and the Salt Lake real estate market has gone up like a rocket, and we've really benefited. Our children, each of our

three adult children still have home loans. We're thinking of selling one of our six rental properties. It was an exchange property, and giving each of them $100,000 to reduce the principal balance on their loan so that they'll get them paid off sooner. So what we're trying to do is accelerate them getting out of debt. I love it. I would do that. Now, what you do need to do is you need to talk to your tax advisor because you're going to want to take a unified estate tax credit because you cannot gift somebody $100,000, even your own kid, without getting into gift tax unless you use the unified estate tax credit because you cannot gift somebody $100,000, even your own kid, without getting into gift tax unless you use the unified estate tax credit. So talk to your estate planner, your tax advisor on how to do it.

But the concept, paying off your kids' houses, you're breaking, you're changing the family tree. I love that. I would have a caveat on there that they're not going to go back in debt. You don't go buy a new Cadillac, it's going to pay off your house, right? But we're going to go that direction. I saw some recent financial statistics, and there was some pretty troubling news. When families were asked how long it would be before they faced financial hardship, if a spouse died, nearly

one-third said they'd be in trouble immediately. Another 44% said they'd be financially drained within six months. People, it does not have to be this way. Term life insurance plans are just plain cheap, and companies have made it even easier by not requiring exams in many cases. There really is no excuse to leave your family in this situation by not having life insurance. This is why I talk about Zander Insurance every day.

They're committed to protecting families with the only products that I recommend, and their team keeps the entire process simple and affordable. Go to Zander.com for quick online pricing or call 800-356-4282. This has to be a priority. If your family is in this situation, you need to get this hour. I'm Dave Ramsey, your host. You jump in. We'll talk about your life and your money. Dr. John Deloney, Ramsey Personality, is my co-host today.

Hey, homeschool parents, we know that preparing your teen for the real world can feel like a big job, especially when it comes to teaching them complicated money topics. But you can do it, and our homeschool curriculum can help. Foundations in Personal Finance has helped over 5 million students learn the money lessons that they need, now and down the road. Best part is it has all the lesson plans, the video content, activities already created, giving you some needed time back in your day if you're a homeschool parent. Text HOMESCHOOL to 33789 to learn more about changing personal finance curriculum for middle and high schoolers.

HOMESCHOOL to 33789. Naveel is with us in Charlotte. Hi, Naveel. How are you? Hi, Dave. Very happy to be on789. Naveel is with us in Charlotte. Hi, Naveel. How are you? Hi, Dave. Very happy to be on your show. How are you? Better than I deserve.

What's up? So I'm 23 years old. I just got a new job of making $87,000 a year before taxes, and I'm not really sure when I'm going to be married or have a house within the next possibly three to five years, but I do want to save up for them. Do you feel as though I should continue with me not knowing when I'm going to have those actions? Do you think I should save up for them still in like a CD or a bank account, or should I invest that money into a mutual fund as I'm doing with the rest of my money?

Great. Good job. What are you doing for a living? I am a project manager with a company that ships stuff to your house. It has a little smiley face on it. Oh, that one. Okay. $87,000.

Awesome. At 23 years old. That's impressive, sir. That's awesome. Very cool. Very cool. Yeah87,000. Awesome. At 23 years old. That's impressive, sir. That's awesome. Very cool. Very cool. Yeah, thank you. Well, first thing is we have to be debt-free and have an emergency fund. Have you done that? Yes. I'm technically past baby step three. I do have about three to six months of expenses.

My expenses have changed because I just moved back in with my parents when I got this job, but I do have what was six months of my previous expenses. Okay. All right. Yeah, I'd start putting, go ahead to baby step four and put 15% of your income aside for retirement. Beyond that, you're saving and investing for these other things you're talking about. And, you know, the closer to five years that you're going to have that money parked,

the more likely I would be to move towards mutual funds uh you know when you mutual funds are volatile and they go up and down because the stock market goes up and down but if you leave it alone five years you have a very high probability of making money on it percentage wise the number of in the five-year periods that have lost money is almost none uh but uh twice as many many two-year periods have lost money. So you've got about a 50-50 chance at two years of losing money or making money. But if you're parked in a savings account, you're making 1%. So me, if I'm 23, I'm going to play that because you don't have any set plan right now for when you're going to buy.

You don't have any set plan for marriage, those kinds of things. So I'm going to go ahead and play that long play because it's probably going to be pretty close to five years before you have to actually cash that in and use it. Is that agreed? Yes, that makes a lot of sense. Are you dating somebody right now? Yes, I am. But the way my job kind of works, I travel a lot, so I don't really have a home location, and thus I don't really know whether or not I'm going to be moving in with this person or marrying them really any time soon. That sounds more like a relationship issue than a job issue, but we can save that for another phone call. How about that?

Good deal. Yeah, I want to know if he was just thinking, I hope to maybe a spouse will fall out of the sky, or we're getting closer there. That's a good clarification. That's incredible. 23 years old, way down the road there. That's fantastic. Well done. Michaela is with us in New York City. Hi,

Michaela, how are you? Good, how are you, Dave? Better than I deserve. What's up? So, yeah, me and my husband, we got married last year in March 2020, and our first goal was to pay off my husband's student debt and credit card, which was $28,000, and that was together. We live here in Long Island, New York, and I have some students that are overseas. So I'm originally from Sweden, and I have a $29,500 student loan, but my interest rate is $0.05.

I don't care. Which means that right now I only pay $12 a year, and I'm not taking any further loans. So you want to keep it like it's a pet because it doesn't eat much? No. The dilemma is that we want to start a family in the near future, and we live in a one-bedroom apartment. And, yeah, we are just debating if we should. No debate.

Pay it off. Pay it off. Pay it off. Don't start a family while you're still chained to something overseas yeah let's get that paid off as soon as possible if you have a baby before the student loan uh is gone and before you have the money to move into a different property uh then just move to a two-bedroom yeah we have 18,000 saved up right now oh good how much is the student loan 29 $29,500. $29,000.

Oh, good. Well, you only got $10,000 left, so pay $18,000 on the student loan today. Pay it off. Are you there? Yeah. It's emotional. It is.

It is. But here's what's going to be real emotional. When you start your family with chained to nothing. Yeah. Here's the thing. The question you're really asking us is, what is the shortest distance between where I am today and being stable financially and wealthy financially? And the shortest distance is don't screw around with a student loan

and keep it around like it's a freaking pet. You have to kill that thing and get rid of it, and that will give you more stability and a shorter distance to wealth and stability financial peace for you and your family than keeping it around and it's in the closet growing and munching over there and just chomping like some kind of monster in the closet like some kind of cartoon or something and no no no no no no clean up your life when you have no payments you feel different physically when you have no payments your relationships are changed when you have no payments your mind is clearer to make

better decisions um you're a better mom uh no question about it and uh it's not to say if you're a bad mom if you have debt no don't give me give me those stupid tweets. But the point is, I mean, when your mind is clear and free of the anxiety and the stress associated with debt, it opens you up to be a better husband, better wife, better employee, better version of you. You sleep better. You eat better. You just walk through life better. Yeah. Right?

And that's what we want for you. And, yes, you're going to have another year of saving for a house, and that's okay. It's all right. Whoop-de-doop-dee. You've got plenty of time. Tom is in Omaha, Nebraska. Hey, Tom, how are you? Good, Dave. How are you today?

Better than I deserve. What's up? Well, I've been listening to you a lot of years, and I thought, hey, it's time to give you a call. About a year ago, my mom passed away and left some land and some money with us. I have about $100,000 cash I parked. And I just thought, hey, just leave it sit for a while until everything gets kind of calmed down and then decide what to do. Just curious if I should pay my house off or debt-free except the house. We do have six months emergency fund set up, so I didn't know if I should pay the house off or debt-free except the house we do have six months emergency fund set up so i didn't

know if i should pay the house off sure um and uh move on i'm 64 i didn't know if that mattered sure why wouldn't you well here's the reason i called you i had a guy not one of yours but not one of your trained people which i am going to look into next week but he he wanted to sell me an annuity hundred thousand dollar annuity and i i said no i'm not gonna do it i've been listening to dave long enough i'm gonna i'm gonna run run like the wind and uh get away from that and so then i got thinking well should i invest it and to uh let me ask you this tom tom you were number one you knew what i was going to say for you called right and you know i did i've been listening to you for a lot of years. We're just chasing our tail here.

Reverse engineer it for a second. You're 64. I'm turning 61 this week. About the same age. You're sitting there in a paid-for house. Would you go borrow on it to invest the money? Absolutely not. Same dadgum thing, dude.

Imagine being 64 and heading into retirement with no payments on your house and just being completely free. Imagine doing that by 5 p.m. today. What a gift that your mom will have left you there. That's incredible. This is The Ramsey Show. Hey, y'all. I'm Christi Wright. Listen, when you're tired and not getting enough sleep, your health and happiness suffers. That's why I'm a huge fan of Glorify, the number one daily worship and well-being app. This app has calming meditations and peaceful sleep music so you can finally push pause and get some rest. Give Glorify a try.

Download the Glorify app and get 50% off their full library when you use the code RAMSEY. That's the code-free stage. Mike and Carrie are with us. Hey, guys, how are you? Better than we deserve, Dave. How about yourself? Just the same, sir. Where do you guys live? Lakeside, Arizona. And what's that near?

It's near Flagstaff. Oh, yeah. Beautiful area. Cool. Welcome to Nashville. Thank you, sir. And here to do a debt-free scream, how much did you pay off? We paid off $288,495.

Woo! Nice. How long did this take? Six years and three months. Way to go. And your range of income during that six years? So we started at $21,450 and ended at $121,860. That's a little jump. Okay.

What do you guys do for a living now? I am a management analyst for the state of Arizona. And I'm the office manager for a construction company. Ah, very cool. What kind of debt was this $288,000? I'm guessing with six years It might have been your house. Personal loans, house, credit cards, cars, and mostly student loans. But we sold the house to help pay off some of that debt.

Oh, the house is gone. The house is gone, yeah. Where are you living? We have a different house that we stay in now. We sold that one, though, to help catapult us. Okay. And the one you're in now paid for? No.

No, okay. All right. So, okay. I want to make sure I get my story straight. So, you had a bunch of student loan us. Okay. And the one you're in now paid for? No. No. Okay. All right. So, okay. I want to make sure I get my story straight. So, you had a bunch of student loan debt. Yes. About $133,000. Wow.

What was that from? What was the degrees? Mine is in business management. And mine's in health information systems. So, about half each? Okay. All right. Good for you guys.

Okay. So, how long have you guys been married? 20 years today. Oh. Congratulations. Happy anniversary. Thank you guys. Okay. So how long have you guys been married? 20 years today. Oh, happy anniversary. Thank you. Very nice. So what in the world happened six years ago that put you on this journey? So the end of 2014, November, he had gotten laid off from his job,

and I was about a week away from having our fourth son. And working part-time, we were already living paycheck to paycheck, and that really just killed everything we were doing. Yeah. That's scary as crap. It is. I had heard you on the radio driving our kids to school in the morning, and it had always struck a chord with me. So we had talked about it and decided that was better than what we were currently doing, and when we got our tax return that January, we ordered several of your books.

And as soon as I started reading them, I was hooked. He worked on finding employment again, full-time. I went from part-time at my company to full-time employment. We both took a second job doing our ride share in our community. Wow. Nights and weekends. Wow. And then a few years into the journey

I actually had the opportunity to teach your college curriculum for our local community college Nice So at one point we were working five jobs Wow

with four boys and just kind of chipped away at it Wow It took us six years obviously but we did it Well it sounds like

the income has been on a journey It has, yeah All over the place Wow and not afraid of hard work either No Way to go Willing to put it in It's kind of cool Well, it sounds like the income has been on a journey. It has, yeah. All over the place. Wow. And not afraid of hard work either. No. Way to go.

Willing to put it in. It's kind of cool. Was the community college paying you to teach Dave's class? Yes. That's incredible. That's a win on top of a win. It was awesome. I loved teaching it.

That's fantastic. Well, thank you for doing that. Thank them for paying you. That's good. That's exactly right. Life is good. That's a good answer. Everybody's winning in this story.

I like it. Very cool. Man, that's a good everybody everybody's winning in this story i like it very cool man that's a long journey it is how do you how do you stick with it for a six-year grind so hard work and dedication and if you fall off the wagon so to speak uh just hop back on and just get get back on track yeah not every day was perfect on the journey. Obviously, it's that long. So you just have to forgive yourself, make those mistakes, and move forward. Carrie, when you were telling us the story about when he lost his job when you were pregnant, you grabbed his hand real tight. So that's still sitting right there on your chest. It's a good and a bad moment.

It got us to where we are now. I wouldn't change it now, but in the moment, we were terrified. Yeah. That's still with you. That'll probably be with you for a while. What about you, man? Was that scary coming home, having to let your wife know? Your pregnant wife know you just lost your job?

Yeah, I almost didn't want to tell her. I would not almost. Right. Didn't want to at all. Right. It was a week before we had him, and it was, and it was right before Thanksgiving. So it was just, it was a tough time. Wow.

Kudos to you, man, for dusting yourself up and getting back out there and saying, I'm going to do two and three and four jobs. We're going to make this thing happen. Good for you, man. Thank you. It's incredible. We also cash flowed several things during that time. Medical.

We have four boys. A lot of medical. A lot of medical. A lot of medical. Vehicle repairs. And he's going for another degree right now. So we've been cash flowing all of that. Excellent. Finished baby step three.

So we're on to four, five, and six. Excellent. Good for you guys. That's awesome. Thank you. Proud of you guys. Great job, rock stars. Thank you, sir.

Absolute heroes, man. That's amazing. Very, very, very cool. Six years. Wow. Good stuff. Well, we got a copy stars. Thank you, sir. Absolute heroes, man. That's amazing. Very, very, very cool. Six years. Wow. Good stuff. Well, we got a copy of the Legacy Journey for you. That's the next chapter in your story for sure to move on to Baby Steps Millionaires now.

That's where we're headed. And, of course, Total Money Makeover, so you can give that away and get someone started on their journey because you'll bump into somebody. You know you will. Right. There's no way around it. They're everywhere. They need to know this information.

So, good stuff. All right. Mike and Carrie from the Flagstaff, Arizona area. $288,000 paid off. Six years and three months, making $21,000 to $121,000 over that six years. Up to five jobs at one point. Count it down. Let's hear a debt-free scream.

Three, two, one. We're debt-free! Yeah! Yeah! Whoop, whoop, whoop, whoop, whoop, whoop. You don't have any payments and you make $121, you can put some money back and turn everything around. They just turned a corner and they don't even know it.

Oh, man. And she looks at him like she likes him. This is so good. And vice versa. Yeah. Yeah. Well, yeah. You go through six years of hell together to come out on the other side.

And, man, I don't know. That light shines a little bit brighter on that person sitting next to you, right? Yeah. We can do anything. We've been battling together. Yeah. We can do anything. Absolutely.

That's incredible, guys. Powerful stuff. Christopher is with us in Richmond, Virginia. Hi, Christopher. Welcome to the Ramsey Show. Hey, guys. How are you doing? Better than I deserve.

How can I help? Okay, so let me just give you a rundown of basically who I am and my background. So I'm a 22-year-old senior at Virginia Tech, actually. So fingers crossed, hopefully this year I'll be done. I'm going to have $14,000 in loans after I'm done with everything, which is pretty good considering I don't have to pay anything yet for school and financial aid has just covered everything. Basically right now I have $24,000 saved up and $700 in stocks and stuff like that.

Right now my major is in sports media and communications, so I'm just going to stick with it as I'm a senior right now, so there's really no point in switching it. Before I run out of time, what's your question, Christopher? Basically, my thing is I don't love my major anymore, and I'm not really passionate about the sports side of media anymore. And I've been looking more into stocks and basically just looking at stocks and real estate.

So my thing is what can I do to set myself up for success, but now that I'm basically lost in life. I've never felt so lost at stocks and real estate. So my thing is, what can I do to set myself up for success, but now that I'm basically lost in life? I've never felt so lost at one point in life. So at this point, I just don't know where to turn or what to do with my money or anything. Okay. As far as the money part goes, you graduate, and you're going to have a degree in sports management,

which gives you some business background and some business classes under your belt, and you can walk into the financial world and use that. You can walk into the real estate world and use that. You do not have to go back for a master's in one of those areas. I wouldn't. No, absolutely not. I wouldn't spend the money.

You've got the money in the bank to pay off your student loan. As soon as you get gainfully employed, I would do that. And the rest is your emergency fund. And then let's start investing and working on your career, getting your income up and getting moving. I think you can do it. And there's this illusion that everyone who graduates with their major, you think that everyone around you walking through their senior year has it all together.

And what I want to tell you is everybody else is scared too. The world's chaotic. It feels even more chaotic. And when you're looking at the job boards and the this and the that, I'm not keen on this. Don't stress yourself out. Don't stike yourself out. You've gotten this far.

You're going to be good to go. And like Dave said, that degree you have can send you in any number of directions in the business world. You know, we do not have a single sports team at Ramsey, not one. And you could walk in here, interview, and, you know, we would look at you for a position. Absolutely. Based on the way you carry yourself, based on what you could bring to the table in the particular area you're trying to deal in. And, you know, you should have some academic underpinning to be able to add value in some businesses somewhere. And it would have nothing to do with sports.

I want you to find one or two men in your life that are ahead of you, five years ahead of you, ten years ahead of you, and just sit down and say, hey, I'm about to graduate in a year. I'm starting to freak out a little bit, and I'm nervous, and I'm uncomfortable, and let them speak some wisdom and truth into you. If they're the right kind of man, they'll say, I was too, and I am still sometimes, because all of us are sometimes. This is The Ramsey Show. Dr. John Deloney, Ramsey Personality, host of The Dr. John Deloney Show, is my co-host today. He's also the author of the bestseller, Redefining Anxiety. It's one of our quick reads. It's an 80-page quick read on redefining.

Give you a whole new look on anxiety. And most everyone struggles with it at some level, some debilitating, some passing and driving by, some ongoing. But hey, it's a word we are all well acquainted with. So check it out. Sometimes it helps it to, it makes it behave to give it a proper name. It just demystifies the whole thing.

There you go. Yeah, to properly label things and not falsely identify yourself with them. So yeah, check it out, Redefining Anxiety. It'll help you. You can also join John on his show, The Dr. John Deloney Show, one of our fastest-growing podcasts here. Ask John at RamseySolutions.com. Send in an email.

Kelly will get back with you and make you part of that show. We'd love to have you. Brandon is with us. Brandon is in Colorado Springs. Hey, Brandon, how are you? I'm doing great, Mr. Ramsey. Dr. John, thank you so much for taking my call. Sure. What's up?

Yeah, just calling to see if I can kind of do a little bit of a Suzy Orman thing with you. I have me and my wife. Probably better do a Dave Ramsey thing with you. Yeah, I wouldn't do that. Yeah, sort of does it fit into the Ramsey plan here? We're looking to purchase a home in the mountains. It's going to be a vacation home, kind of near one of my ski resorts I love going to. Cool.

You got the money? I'm so sorry? Do you have the cash? Oh, to purchase it cash? Yes. No, but we do have a down payment. Yeah, I wouldn't do it. A second home is a toy.

And you pay cash for toys if you want to be wealthy. I've got a lake house I'm heading to this afternoon when I get off the air. And I paid cash for it a long, long time ago. And then I rebuilt another one on the same property and paid cash for that. And I absolutely love it I would have 23 years later hated the stinking thing however if I had been paying payments on it as much as it sits empty and it's just you're just not ready to buy a second home you don't need to be doing vacation homes when you don't have the money to pay for them what do you tell somebody Dave that has this imaginary spreadsheet with all of the airbnb guests they're gonna have to float it all and

all it becomes this funny math where we talked about this earlier here's the thing using debt to do stuff like this only works when it works and nothing ever works in life the way you think it's going to. Never. Never. The best laid plans of mice and men. You just, you know, you can project this yellow brick road experience, and then you'll run into the Wicked Witch. Every time. And the flying monkeys.

And those little Oompa Loompa guys look like poodles with the curved swords. Whoa. Remember them? Yeah. You're going to run into all these things along the way. The Yellow Brick Road is fraught with danger, including stupid straw men that have no brain. They're out there everywhere. And, you know, this is what you run into. So this stuff only works if it works, and nothing ever goes exactly as planned and the beautiful thing is when you own

a bunch of rental property and you don't have any payments and there's a pandemic or something and some of your tenants can't pay um because they lost their jobs it's not their fault uh you can grant mercy um but when you have payments you're the one needing mercy that's right and but but but those tenants will pay off that rental property for you you heard that crap see that's what that's that yellow brick road thing you left out the flying monkey yeah you know you left out the pandemic you left out the big bad wolf i'm going to mix up a bunch of different stories here together in this metaphor but you know but you see what i'm saying? And that's the problem is that... It happens every time, too.

It does. Every time. Life is predictable. Life is happening. It's going to happen. I never thought of a vacation home. I love the way you say it. It's a toy.

Yeah. It's a toy. It's fun. If you want to buy a four-wheeler, a motorcycle, a boat, it's a toy. Yep. But if you've got to put payments on it, that just means you're too broke to have it. That's right. And because I added up when I was broke because I'm a water skier.

I love the lake. I love the mountains too like he does. I'd love to have – I don't have a ski house, but I wouldn't mind having one. They're wonderful. But I added up one time when I had payments on a boat when I first started doing this stuff about 30 years ago. Well, it was actually longer than that ago. But I added up with the payments I was making on the boat, the insurance on the boat, what it cost me per minute to ski. I averaged out that I was going to ski this many times a year, and I would ski 10 minutes this run. I'd ski five minutes that run.

I'd ski 15 minutes that run. And I added it up. And a buddy of mine started telling me about how he needed a better bass boat. And so I added up per pound what the bass was costing him. And it was something like $14,000 a pound, you know, or something. I mean, it was like. Okay, so, hey, that's a good question then. How do you decide?

So if this guy is going to try to buy a ski house that he likes, and he goes and visits it seven times a year, which would be a lot of ski trips. You cannot financially justify it. So the only time it's justified is when you've got the cash in hand. It's not financially justified. And it's not about investment. It's about, this is the life I want. It's not harming my life.

There you go. Because it does not make sense. It's a lifestyle choice. You've been to my lake house. So if you say – I mean, that one makes sense. That's a pretty cool house. Well, it's a beautiful home.

It's a cool house. And it's a great investment. It's gone up in value. That's fine. But the number of hours we spend there, the number of weekends we spend there, the amount of time we spend on the water, could we not rent an Airbnb on the lake and come out millions of dollars ahead? Absolutely we could. But we've got the money, and it doesn't hurt our financial situation because we're not paying payments on it.

Gotcha. And so, but when you're, you know, you've got to look at it because it truly is a toy. You know, you cannot justify. I love that idea. You can't financially justify these things at all none of them uh they don't make sense um and so you know with what you spend on a vacation home how many times can you know you can rent a just outside colorado springs i've done it you can rent the uh 15 000 square foot mansion on the side of a mountain ski in ski out for 30 000 bucks a week 30 000 bucks a

week right okay and if you go four weeks a year okay let's just that's 120 000 bucks right and so how long does it take you to get to five million bucks that's a lot of weeks you know you cannot financially justify it you can't financially justify it but but if you've if you've got 100 million dollars and you want to drop five million dollars in that thing it's a toy and you can afford it then it doesn't matter that it doesn't financially work it's a place that's yours it's your family's it's memory you know the difference between a five thousand dollar car and a twenty five thousand dollar car you can't justify it financially but if you can afford it it's okay to take that bit of a luxury there you i like you know it's the same kind of a thing.

Because both of them will get you from point A to point B. So shut up, stop your whining. Right. And both of them probably got air conditioning. So shut up and stop your whining. And both of them are somewhat reliable. So shut up and stop your whining. So the difference in a $5,000 car and a $25,000 car is a want.

Right. And it's okay. I'm not against wants on this show. But you've got to pay cash for them. Because the upgrades are luxury. There you go. It's living like no one else, so later you can live and give like no one else. Put yourself in that position is what I would do.

I love that, Dave. I love it. I love it. That's the direction to go. And I want you to get a vacation house. I'm not saying I'm doing something and telling you you shouldn't. But I didn't. The first property, again, you've been down there.

We had our personalities retreat down there. But the first one I bought was $103,000. It was one tiny little lot off to the right-hand side of that property. And it was this little bitty brick house from 1974 on it. And we had a boat dock. All I cared about was a boat dock and a place to sleep. That's all I cared about. And a place to put the boat and, you know, have fun and ski the kids and tube the kids and all that stuff.

And the kids were tiny. And, you know, now all these years later, we bought several properties adjacent, did some teardowns, some rebuilds, built a nice big home on there now. And, you know, all the grandkids, all seven of them and all the 14, 15 people, the Ramsey clan down there this weekend, you know, for Labor Day weekend, right? So, but we worked up to that over 25 years, and we paid cash for it, and at no point was it a big percentage of our world, including today. So it was never a burden. Yeah. It was only fun, right? Yeah, and because it just takes the fun out of it.

So 130. And also it gets you in the land of stupid real quick. Oh, yeah. And then it gets to the land of justification, and then all of a sudden, one flying monkey, and the whole thing comes down. Yeah. If you got the down payment only, hon, just go rent it. Yeah. Just go rent it three times a year until you've got the money.

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